Shri Mansoor Sahib Bazir Ali, CHENNAI V. The Joint CIT, CHENNAI

ITA 1997/CHNY/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6155 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 27-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 13-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI IRS
• Keywords: Unexplained investment; Salary income
• Section: 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ I.T.A. NO.1997/MDS/2013 ( / ASSESSMENT YEAR : 2009-2010) SHRI. MANSOOR SAHIB BAZIR ALI, OLD NO.43-B/N9-A, CHINMAYA NAGAR, SAYEE NAGAR, ANEX, FIRST CROSS STREET, VIRUGUMBAKKAM, CHENNAI 600 092. [PAN :AAHGP3732P] ( !% /APPELLANT) VS THE JOINT COMMISSIONER OF INCOME TAX, BUSINESS RANGE-III CHENNAI 600 034 . ( &'!% /RESPONDENT) / APPELLANT BY : SHRI. SAROJ KUMAR PARIDA, ADVOCATE / RESPONDENT BY : SHRI. ANIRUDH RAI, IRS, CIT-DR /DATE OF HEARING : 27.03.2014. /DATE OF PRONOUNCEMENT : 12.05.2014. #( / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER THE APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILIN G THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, CHENNAI , DATED I.T.A.NO.1997/MDS/2013. . :- 2 -: 01.08.2013 RELEVANT TO THE ASSESSMENT YEAR 2009-201 0. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER HAS CONFIRMED THE LEVY OF PENALTY U/S.271D OF THE INCOM E TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) 2. THE ASSESSEE IS AN INDIVIDUAL AND IS HAVING INCOME FROM SALARY AND BUSINESS OF BUILDING MAINTENANCE. IN THE PERIO D RELEVANT TO THE ASSESSMENT YEAR 2009-2010, THE ASSESSEE ALONGWITH M R.R.M.ZAFARULLAH PURCHASED ONE PROPERTY AT 9A, SAI NAGAR ANNEXE, IST CROSS STREET, VIRUGAMBAKKAM, CHENNAI, FOR I30,00,000/-. THE ASSE SSEE AND MR. R.M. ZAFARULLAH EXECUTED A MEMORANDUM OF UNDERSTAND ING (MOU) ON 02.07.2008 TO MAKE INVESTMENT IN THE ABOVE SAID PR OPERTY. MR. R.M. ZAFARULLAH CONTRIBUTED I25,00,000/- AS HIS SHARE OF INVESTMENT AND WAS ENTITLED TO RECEIVE 50% PROFIT FROM THE SALE OF PROPERTY. THE ABOVESAID PROPERTY WAS PURCHASED ON 11.07.2008 IN T HE NAME OF ASSESSEE ALONE. SUBSEQUENTLY, THE PROPERTY WAS RET AINED BY THE ASSESSEE AND THE ASSESSEE REPAID AN AMOUNT OF I27,0 0,000/- TO MR. R.M. ZAFARULLAH BY CHEQUE. DURING THE COURSE OF SC RUTINY ASSESSMENT THE ASSESSEE HAD SUBMITTED THAT THE PROPERTY HAS BE EN PURCHASED WITH THE CASH LOAN AND ADVANCES FROM DIFFERENT PERS ONS, APART FROM I.T.A.NO.1997/MDS/2013. . :- 3 -: FUNDS CONTRIBUTED BY MR. R.M. ZAFARULLAH AS INVEST MENT. THE CONTENTION OF THE ASSESSEE WITH REGARD TO INVESTMEN T BY MR. R.M. ZAFARULLAH WAS ACCEPTED BY THE ASSESSING OFFICER. AS REGARDS LOANS & ADVANCES FROM OTHER PERSONS, SINCE THE ASSESSEE COU LD NOT SUBSTANTIATE HIS SUBMISSIONS, THE ASSESSING OFFICER MADE ADDITIONS FOR THE SAME AS UNEXPLAINED INVESTMENT. LATER ON, PENALTY PROCEEDINGS WERE INITIATED AGAINS T THE ASSESSEE FOR TAKING CASH LOAN FROM MR. R.M. ZAFARUL LAH, THEREBY VIOLATING THE PROVISIONS OF SEC. 269SS. THE ASSESSING OFFICER VIDE ORDER DATED 29.10.2012 LEVIED PENALTY OF I25,00,000 /- U/S. 271D. IN APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CONTENTIONS OF THE ASSESSEE THAT IT WAS NOT A CASH LOAN BUT INVESTMENT BY MR.R.M. ZAFARULLAH. AGGRIEVED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESS EE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL. 3. SHRI. SAROJ KUMAR PARIDA, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW HAVE ERRED IN HOLDING THAT FOR PURCHASE OF PROPERTY, THE ASSESSEE HAS TAK EN CASH LOAN FROM MR.R.M. ZAFARULLAH. THE LD. COUNSEL SUBMITTED THA T MOU BETWEEN THE ASSESSEE AND MR. R.M. ZAFARULLAH SHOWS THAT IT WAS A JOINT VENTURE I.T.A.NO.1997/MDS/2013. . :- 4 -: INVESTMENT. THE MOU WAS PRODUCED BEFORE THE AUTHO RITIES BELOW, HOWEVER, THE SAME WAS NOT CONSIDERED. THE ASSESSEE HAD ALSO PLACED ON RECORD AFFIDAVIT OF MR. R.M. ZAFARULLAH STATING THAT HE HAS INVESTED I25,00,000/- AND CONFIRMED ABOUT THE EXECUTION OF M OU BETWEEN THE PARTIES. 4. ON THE OTHER HAND, SHRI. ANIRUDH RAI, REPRES ENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE IMPUGNED ORDER. THE LD.DR SUBMITTED THAT THE ASSESSEE HAS TAKEN CASH LOAN OF I25,00,000/- FROM MR. R.M. ZAFARULLAH AND HAD REPAID THE SAME ALONGWI TH INTEREST OF I2,00,000/-. THE ALLEGED MOU AND AFFIDAVIT SUPPORT ING THE CONTENTION OF THE ASSESSEE ARE MERELY SHAM DOCUMENTS. THE LEA RNED DR PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD SUBMISSIONS MADE BY THE REPR ESENTATIVE OF BOTH SIDES AND HAVE PERUSED THE ORDERS OF THE AU THORITIES BELOW. A PENALTY OF I25,00,000/- U/S. 271D HAS BEEN LEVIED O N THE ASSESSEE FOR ALLEGEDLY TAKING CASH LOAN FROM MR. R.M. ZAFARULLAH FOR PURCHASE OF PROPERTY. THE ASSESSEE HAS PLACED RELIANCE ON MOU DATED 2.7.2008, THE CONTENTS OF WHICH ARE REPRODUCED IN PENALTY ORDER D ATED 29.10.2012 . A PERUSAL OF THE SAME SHOWS THAT THE ASSESSEE I.T.A.NO.1997/MDS/2013. . :- 5 -: ALONGWITH MR. R.M. ZAFARULLAH HAD JOINTLY INVESTED MONEY TO PURCHASE PROPERTY AND THEREAFTER SHARE PROFIT FROM ITS SALE. THE PROPERTY WAS PURCHASED ON 11.7.2008 IN THE NAME OF ASSESSEE. SUB SEQUENTLY, THE PROPERTY COULD NOT BE SOLD AND WAS RETAINED BY THE ASSESSEE. THE ASSESSEE REPAID THE AMOUNT INVESTED BY MR. R.M. ZAF ARULLAH. MR. R.M. ZAFARULLAH HAS SWORN AN AFFIDAVIT DATED 27.06.2011 WHICH WAS PRODUCED BEFORE THE ASSESSING OFFICER WHEREIN HE HA S ADMITTED THE EXECUTION OF MOU FOR PURCHASE OF PROPERTY. THE AS SESSING OFFICER IN ASSESSMENT ORDER DATED 26.09.2011 HAS ACCEPTED THE CONTENTION OF ASSESSEE WITH REGARD TO INVESTMENT OF MR. R.M. ZAFA RULLAH IN THE PROPERTY. THERE IS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE HAS TAKEN LOAN FROM MR. R.M. ZAFARULLAH. PENALTY PROCE EDING HAVE BEEN INITIATED BY DRAWING INFERENCES FROM THE TRANSACTIO N BETWEEN THE ASSESSEE AND MR. R.M. ZAFARULLAH. WE ARE OF CONSIDERED OPINION THAT PENALTY U/S. 271 D HAS BEEN LEVIED ON ASSUMPTION THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269SS BY TAKING CASH LOAN OF I25,00,000/- FROM MR. R.M. ZAFARULLAH. IT IS A TRAIT LAW THAT THE PENALTY CAN NOT BE LEVIED ON THE BASIS OF PRESUMPTIONS AND PROBABILITIES. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, AND THE WELL SETTLED LAW , PENALTY LEVIED I.T.A.NO.1997/MDS/2013. . :- 6 -: U/S.271 D IS DELETED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 12 TH OF MAY, 2014, AT CHENNAI. SD/- SD/- ( . . . ) (DR. O.K. NARAYANAN) / VICE PRESIDENT ( ! ) (VIKAS AWASTHY) ' # / JUDICIAL MEMBER !' /CHENNAI #$ /DATED:12.05.2014. K.V $% &' (' /COPY TO: 1. ) APPELLANT 2. / RESPONDENT 3. * ( )/CIT(A) 4. * /CIT 5. '+, - /DR 6. ,. / /GF. I.T.A.NO.1997/MDS/2013. . :- 7 -: